Central bankers won’t take much from this job report, say analysts

The Federal Reserve wants to raise interest rates in December and the job losses reported for September won’t derail them, economists said Friday.

“It is very clear from their rhetoric that they want to do” another rate hike in December, said Rob Martin, economist at UBS.

“It takes a lot to move them off that,” he said.

As expected, the two hurricanes last month distorted the jobs report.

The government reported the economy lost 33,000 jobs in September, the first decline since 2010. In contrast to this weak signal, the unemployment rate fell to 4.2%, a 16-year low and a stat unaffected by the storms, the government said. Wages rose to a 2.9% annual rate, a post-recession high.

Martin said the Fed “would not take any signal” from the report, not just the weak parts like the decline in nonfarm payrolls, but would also shrug off the strong bits like the drop in the unemployment rate and the jump in average hourly earnings.

The central bank will have two more job reports before its meeting on Dec. 12-13 to gauge the labor market, he said.

John Silvia, chief economist at Wells Fargo, said the central bank will see enough hints that the economy is on track for moderate growth and rising inflation.

There is “enough evidence to say they’re on track to get the economy they thought they were going to get, and they’re going to go [ahead and raise rates in December],” Silvia said.

The Fed meets again at the end of October, but without a press conference, and analysts see no chance of any Fed rate move then.

Investors saw the drop in the unemployment rate and the rise in wages as confirming that the central bank will raise rates in December. Investors now see a move as a virtual certainty, giving a 98% chance of a move, according to CME FedWatch tool. Stocks
SPX+0.04%opened lower after hitting record highs this week.